ESCALAR: up to €1.2 billion to help high potential companies grow and expand in Europe
New Delhi: Today, the Commission is launching ESCALAR, a new investment approach, developed together with the European Investment Fund (EIF), that will support venture capital and growth financing for promising companies, enabling them to scale up in Europe and help reinforce Europe’s economic and technological sovereignty. It will provide up to €300 million aiming to increase the investment capacity of venture capital and private equity funds, triggering investments of up to €1.2 billion, or four times the original investment, to support promising companies.
With the launch of ESCALAR, the Commission is delivering on one of the actions announced in the new SME strategy to improve access to finance for SMEs. This initiative is particularly relevant in the difficult economic situation SMEs are facing currently due to the coronavirus outbreak. It will support innovative companies during, and after, the crisis, to ensure that Europe can develop and stay at the helm of global technological developments and accelerate its economic recovery.
Commissioner for Internal Market Thierry Breton said: “Commission is deploying all tools at its disposal to help companies overcome the coronavirus crisis. Today, we are strengthening our support to the many promising European companies to ensure they can continue to develop and grow in Europe. With ESCALAR, we are helping unlock significant additional private investments to support the creation of tomorrow’s market leaders.”
EIF Chief Executive Alain Godard said: “Scale-ups need to find growth finance to take their businesses to the next level. By improving the financing environment, more EU scale-ups may choose to stay in Europe to continue their growth, which is even more crucial now in this time of crisis, when growth companies may need additional support from their investors. The ESCALAR Pilot can help the funds themselves to scale up, resulting in larger fund sizes, thereby supporting the EU’s late stage venture capital and growth-focused fund ecosystems.”
In its pilot phase, ESCALAR will provide up to €300 million backed by the European Fund for Strategic Investments (EFSI). This will aim to increase the investment capacity of venture capital and private equity funds, triggering investments of up to €1.2 billion, or four times the original investment, to support promising companies. Interested fund managers can participate in the scheme by responding to the open Call for Expressions of Interest published today by the EIF.
ESCALAR aims to support fund closing by committing up to 50% of the size of the fund. It targets both new funds focusing on financing scale-ups, as well as existing funds wishing to support high potential companies from their portfolio to further develop their growth.
The current ESCALAR call is a pilot phase for 2020 with the objective that ESCALAR, based on this pilot experience, becomes a mainstream European financial instrument, alongside the existing financial instruments after 2020, within the next multiannual framework (2021 – 2027). Analysis and selection of the funds is managed by the EIF.